Direct Equity Tax Credit
Highlights
This program is designed for you because it encourages private investment in new or expanding small businesses, helping to create jobs and diversify the economy. By participating, you can receive a provincial income tax credit for your investments. This credit is available to both individuals and corporations who invest as shareholders in eligible small business activities.
What You Get
- 35% tax credit for activities outside the North East Avalon
- 20% tax credit for activities within the North East Avalon
- Prorated credit for activities in both areas
Benefits
- Significant tax savings on your provincial income tax
- Encourages growth and expansion of your business
- Supports job creation and economic diversification
Applying for this program is straightforward, and qualifying is easy since your business already meets the criteria. By being approved, you can reduce your tax burden and reinvest those savings back into your business, fostering further growth and stability.
Financing Details
Type of Financing: Tax Credit
Repayment Terms and Interest Rates:
- There are no repayment terms or interest rates as this is a tax credit.
Eligible Expenses:
- Investments in new or expanding small businesses.
- Activities undertaken within the Province, specifically outside the North East Avalon (35% tax credit rate).
- Activities undertaken within the North East Avalon (20% tax credit rate).
- A reasonable proration applies if activities are undertaken in both areas.
Ineligible Uses:
- The funds cannot be used for non-qualifying business activities or investments outside the specified regions.
Fees:
- There are no fees associated with applying for or receiving this tax credit.
Qualifications
- Must be a small business.
- Must be involved in new or expanding business activities.
- Business activities must be undertaken in Newfoundland and Labrador.
- Must be creating new jobs.
- Must be diversifying the economy.
- Investors must be individuals or arm’s length corporations.
Must provide an official tax credit receipt with the individual’s T1 Income tax return or the corporation’s T2 income tax return.
Disqualifications:
- Businesses not undertaking activities in Newfoundland and Labrador.
- Businesses not creating new jobs.
- Businesses not diversifying the economy.
- Investors who are not individuals or arm’s length corporations.
Description
This program offers a provincial income tax credit to encourage investment in your business. If you invest in eligible small business activities, you can receive a tax credit.
Here's how it works:
- 35% tax credit for activities outside the North East Avalon area.
- 20% tax credit for activities within the North East Avalon area.
- If your activities are in both areas, the credit is prorated.
This credit can help you reduce your provincial income tax. To claim it, just submit an official tax credit receipt with your tax return.
This program is a great way to attract private investment, create jobs, and diversify the economy. It provides a financial incentive for both individuals and corporations to support your business.
Program Steps
Download the Application Form: Visit the official website to download the Direct Equity Tax Credit Program Application form.
Prepare Documentation: Gather the necessary documents to complete your application. You will need:
- Business Registration Certificate
- Financial Statements (last two years)
- Business Plan
- Proof of Investment
- Shareholder Information
- Tax Clearance Certificate
Complete the Application Form: Fill out the application form with accurate and detailed information about your business and the investment.
Submit the Application: Submit the completed application form and all required documentation to the Department of Finance. Ensure all information is correct and complete to avoid delays.
Await Confirmation: Wait for confirmation from the Department of Finance. They will review your application and may request additional information if needed.
Receive Tax Credit Receipt: Once approved, you will receive an official tax credit receipt. This receipt must be submitted with your T1 Income Tax Return (for individuals) or T2 Income Tax Return (for corporations).
File Your Tax Return: Include the tax credit receipt with your income tax return to claim the Direct Equity Tax Credit. Ensure all other tax documents are in order for a smooth filing process.
